Call it carelessness, “rich people problems,” or “death by a thousand cuts.”
A man took to Reddit this week to lay out a big problem: He makes more than $100,000, and so does his wife. They live in an area that has a low cost of living. And still, they spend their entire incomes every single month.
“Please don’t laugh,” the guy wrote. “We don’t eat caviar, no new Teslas in the garage, we don’t eat out every day, no special expenses that I can think of.”
Their fixed expenses:
$1,400 per month on a mortgage and other housing-related expenses
$1,000 per month for two car payments
$250 on insurance (“I know, I should shop for cheaper,” he said.)
$1,000 on utilities including electricity and gas, plus subscriptions like Netflix
He has children, but they are not in daycare, he said.
“As an engineer who handles numbers, I feel so powerless,” he wrote. “No matter how I dice the expenses, it never jumps to me what was that big purchase that made us get out budget blown.”
The shocking truth is that this man’s family is far from alone. Some 25% of families that make $150,000 per year or more are living paycheck to paycheck, according to a study from Nielsen.
Of course, those who commented on Reddit had a few ideas on how this guy can start budgeting. Here are some of their suggestions.
Figure out a budgeting system
Part of the problem, the man said: He has no idea how much his family spends each month, and what they’re spending on.
“Let’s say we spend $2,000 on groceries and restaurants … still $7,000 goes on what?” he said.
He had tried budgeting systems such as Mint and Personal Capital in the past, he said.
But the fact that he doesn’t know what his expenses are is likely the root of the problem, one commenter said.
“You’re probably a death by a thousand cuts family,” the commenter, “BlazinAzn38,” wrote. “It’s not the huge house or the new cars. It’s the coffees you both buy on your way to work, buying lunch cause you didn’t pack it, etc.”
The commenter suggested manually going through credit card and debit card statements, and typing the expenses into a spreadsheet by category. “I bet you’ll be mortified at how much just slips through your fingers.”
Others recommended budgeting systems. Mint
can work well, one commenter said, as long as you go in and manually check what your expenses are, so you are familiar with any weak spots.
Others suggested the popular system “You Need a Budget,” (YNAB), a software that costs $6.99 per month.
“YNAB makes you confront the reality,” that commenter said. “It’s well worth it.”
Automate your savings
Make saving easy, wrote commenter “iamcnicole.”
“Be sure to automate savings. I started doing this with just $50 biweekly and was amazed at how I didnt even notice it. I probably spend that much on crappy fast food!”
Set up automatic contributions to a retirement account to put away the maximum you can, wrote “thisismy2ndaccting.”
“The automated savings makes living check to check less likely, as you’re much less likely to spend money you can’t see in your account.”
Try a “no spend” month
Make February a “no spend” month, suggested the same commenter, “thisismy2ndaccting.”
That means buying essentials only.
“Log out of Amazon
. Delete your payment information,” the commenter wrote.
The original poster said he’d try it.
Pay off cars
Try to eliminate the monthly car payment, suggested the commenter “randomcards23.”
“Never ever buy a car you cannot afford in saved cash again,” they wrote.
“Most Americans are just like the example above where they assume it’s normal to have a [$300] to $500 payment per car at all times and if they’re lucky they’ll wait to start the cycle again until they’ve paid off the first car.”
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Published at Wed, 30 Jan 2019 19:25:04 +0000